Two top SC Senate Republicans call for ouster of Santee Cooper leaders

Concerned about Santee Cooper’s recent issuance of some $638 million in debt, two top Republican South Carolina senators are publicly calling for the ouster of the state-owned utility’s top leaders.

“Santee Cooper desperately needs a house cleaning. The entire board. The entire management team. All of them. Then use a MiB Neuralyzer on anyone who’s left,” Senate Majority Leader Shane Massey, R-Edgefield, tweeted Thursday.

Senate Finance Committee chairman Sen. Hugh Leatherman, R-Florence, told The State newspaper in an interview Thursday that a specific state law enacted earlier this year “very clearly” spells out how Santee Cooper can issue new debt.

“It wasn’t what the General Assembly instructed them to do,” Leatherman said. “If that’s not malfeasance, ... I don’t know what is.”

Leatherman called on Santee Cooper’s acting board chair, Dan Ray, to resign, saying that would be “the best thing that could ever happen to Santee Cooper.”

But longtime Santee Cooper supporter Sen. Larry Grooms, R-Berkeley, said in an interview that Santee Cooper acted completely within the new law when it issued $638 million in new debt — most of which, he said, was not additional debt but refinancing old debt to take advantage of lower interest rates and save the utility’s customers money. Included in the $638 million is $100 million in additional debt that will go to purposes allowed under this year’s law, Grooms said.

Santee Cooper, which is headquartered in Grooms’ home county, also issued statements saying it acted within the parameters of the law passed earlier this year, and the new debt issued will enable it to save hundreds of millions of dollars for customers. A utility spokeswoman said, however, that Santee Cooper could perhaps have communicated its intentions about the new debt better and will strive to do so in the future.

As for calls for new leadership, the utility said, “The Santee Cooper Board is selected according to state law, and we have no role in that selection. However, this Board, led by Dan Ray, has assembled a new management team and is working with and supporting that team in shaping a leaner, greener Santee Cooper.”

The utility statement continued, “Santee Cooper is transforming our generation mix, adding 500 MWs of new solar... and beginning the process to close the coal-fired Winyah station. We have resolved substantial litigation and are successfully reducing costs, debt and other risks, which has already resulted in improved outlooks issued by two of the three major credit rating agencies.”

In any case, the clashing views on Santee Cooper signal a coming battle with lively Senate debates in January about the future of Santee Cooper: whether it should be sold to an outside utility or whether it should stay as is, albeit with reforms.

Lawmakers are split, however, on how the utility should be dealt with.

Last May, the state brought on a third-party consultant to evaluate competitive bids for buying or managing the utility or whether it should remain state-owned. This year, Florida utility giant NextEra was named the winning bid for buying Santee Cooper. But senators rejected the sale option, instead choosing for reforms. Meanwhile the House chose two options: push NextEra for a better deal and keep the option of reforming the utility open.

Santee Cooper is a historic state agency that for more than 80 years has provided electricity to some 190,000 residential and commercial customers in several coastal area counties, as well as hundreds of thousands of other customers through coops. The utility is a cash cow — in 2019, its revenues were $1.6 billion. Its board of directors is appointed by the governor and approved by the Senate.

After the spectacular failure of SCANA several years ago — formerly the state’s largest investor-owned utility and now part of utility giant Dominion Energy — Santee Cooper has been the topic of conversation by state elected leaders for a possible drastic reform or sale. Santee Cooper came under scrutiny because it was a junior partner in a failed nuclear project that cost $9 billion when abandoned and led to SCANA’s failure.

Earlier this year, senators had hoped to fully explore Santee Cooper’s future. But the COVID-19 pandemic curtailed legislative sessions and made those discussions impossible.

Any new debt issued by Santee Cooper before a possible sale to an outside utility could potentially reduce the amount of money the state could get for the utility.

Issues surrounding Santee Cooper are complex.

Grooms, who wants Santee Cooper to stay a state agency, said the utility has already initiated numerous reforms including having completely new leadership since the nuclear project fiasco. Santee Cooper, which owns some 190,000 acres of large lakes and undeveloped land, will be a better steward of that land, lakes and other utility assets than an outside company, Grooms said.

Core issues with Santee Cooper include its current leadership, which — despite being an improvement from several years ago and now having several outstanding leaders — needs “a complete change,” Massey said.

As evidenced by the unexpected news of Santee Cooper’s new debt, the issuance of which Massey said went against state law, Santee Cooper’s leadership “is not completely forthcoming. They don’t share regularly situations they find themselves in with elected leadership. They aren’t transparent. They aren’t accountable.”

Massey added, “That’s been one of the big issues this whole time — Santee Cooper does these things, and they don’t tell anybody, and then they come and say, ‘We’ll do better next time.’ ”

He said the utility itself could be the driver in whether it’s sold or not.

“If Santee Cooper gets sold, it is not going to be because of NextEra’s (the major bidder for the utility) offer, it will be because of Santee Cooper. The only way Santee Cooper gets sold is if the Legislature gets so angry at Santee Cooper that they get rid of them.”

Massey said he’s keeping an open mind about whether the utility should be sold or not. “But with every day that goes by, I lose more and more confidence in the agency’s ability to address any of the core problems down there.”

State Sen. Dick Harpootlian, D-Richland, this week characterized his position on whether to sell or reform Santee Cooper as being “on the fence.”

“I want to wait, study the issue, learn all the facts, and then make a decision,” Harpootlian said.

Sen. Darrell Jackson, D-Richland, said he too is keeping an open mind. “My position is evolving, however. In light of what happened with SCANA, I don’t fully trust any utility company.”

Leatherman said he has not spoken with any of Santee Cooper’s leadership.

“I am so put out with them, (any) conversations in my opinion would not be beneficial at all for me,” he said.

News of Leatherman’s views on Santee Cooper’s leadership was first reported by the Charleston Post & Courier.

This story was originally published November 13, 2020 at 5:41 PM with the headline "Two top SC Senate Republicans call for ouster of Santee Cooper leaders."